Overstone World All Cap Equity Fund on Marston’s PLC
Thesis
Marston’s operates pubs in the UK, a sector that has been pressured by significant operating-cost inflation. Rising labor expenses linked to higher National Insurance rates and changed thresholds have weighed on profits and market sentiment. Oldfield Partners believes the valuation is seriously depressed relative to the business and increased its position during the quarter. The thesis is a contrarian recovery from unusually negative pricing, rather than an expectation that near-term cost pressure has disappeared.
“We regard both as seriously undervalued and increased our position in each during the quarter.”
Key risks
- Persistent inflation in pub operating costs.
- Higher labor bills following National Insurance rate increases.
- Changes to National Insurance thresholds add further wage-related cost pressure.